Analyzing Garden Silk Mills Limited’s (NSEI:GARDENSILK) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess GARDENSILK’s recent performance announced on 31 December 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Garden Silk Mills
Was GARDENSILK weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze different companies on a similar basis, using the most relevant data points. For Garden Silk Mills, its latest earnings (trailing twelve month) is -₹878.55M, which compared to the previous year’s figure, has become more negative. Since these values may be fairly short-term thinking, I have estimated an annualized five-year figure for GARDENSILK’s earnings, which stands at -₹977.60M. This means though net income is negative, it has become less negative over the years.
We can further assess Garden Silk Mills’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Garden Silk Mills has seen an annual decline in revenue of -6.82%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Looking at growth from a sector-level, the IN luxury industry has been growing, albeit, at a subdued single-digit rate of 5.78% in the previous twelve months, and 9.42% over the past five. This shows that any tailwind the industry is benefiting from, Garden Silk Mills has not been able to reap as much as its average peer.
What does this mean?
Though Garden Silk Mills’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to examine company-specific issues Garden Silk Mills may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Garden Silk Mills to get a more holistic view of the stock by looking at:
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1. Financial Health: Is GARDENSILK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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2. Valuation: What is GARDENSILK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GARDENSILK is currently mispriced by the market.
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3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.